Important Vocab
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GDP |
Currency value of all final goods and services produced within a country’s borders |
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Real GDP |
Currency value of all final goods and services produced within a country’s borders minus the effects of inflation |
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Inflation |
A general rise in the price level of an economy |
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Consumption |
Dollar value of all goods and services purchased by households |
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Investment |
Dollar value of all goods and services purchased by business for the purpose of using in their business |
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Government Spending |
Dollar value of all goods and services purchased by the various agencies of the United States. |
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Net Exports |
Dollar value of all goods and services produced in the United States and shipped to other countries MINUS the value of the goods and services imported from other countries |
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Aggregate Demand |
The amount of goods and services ALL buyers in the economy are willing/able to buy at all the possible price levels |
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Aggregate Supply |
The amount of goods and services ALL companies are willing to produce at ALL possible price levels |
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GDP Per Capita |
Currency value of all final goods and services produced within a country’s borders divided by the population |
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Imports |
Goods and services produced in other countries, then brought to the United States in exchange for currency |
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Exports |
Goods and services produced in the United States, then sent to other countries in exchange for currency |
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Standard of Living |
Intangible concept that seeks to represent a country’s level of economic prosperity. Correlates with GDP growth |
Based on the vocab & videos in Chapter 8 complete the following:
What is GDP?
_________________ in a given period
Four components of GDP expenditures
Exports: ________________________________________
Imports:________________________________________
GDP = _____ + _____ + _____ + _____
What’s NOT included in GDP?
What GDP does not tell us:
_________________________________
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Scenario |
Component of GDP affected: C, I, G, X-M, or NCnot counted |
Effect on GDP (increase, decrease, no change) |
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1. A farmer purchases a new tractor. |
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2. Businesses increase their current inventories. |
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3. You spend $7 to attend a movie. |
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4. Worried about consumer confidence, Ford purchases less sheet metal for cars. |
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5. A retired man cashes his social security check from the government. |
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6. A French company purchases a one-year membership to PartyPeople.com, a U.S.-based |
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website. 7. A person pays $450 a month to rent an apartment. |
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8. Worried about a recession, people begin saving more money. |
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9. The U.S. government hires 10 Chinese-language experts from China to train U.S. workers. |
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10. Government closes school for the month of March. |
In: Economics
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 74,000 |
| Accounts receivable | 143,000 | |
| Inventory | 73,500 | |
| Plant and equipment, net of depreciation | 224,000 | |
| Total assets | $ | 514,500 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 85,000 |
| Common stock | 310,000 | |
| Retained earnings | 119,500 | |
| Total liabilities and stockholders’ equity | $ | 514,500 |
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $350,000, $370,000, $360,000, and $380,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $46,000. Each month $7,000 of this total amount is depreciation expense and the remaining $39,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
Required:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30.
4. Prepare a balance sheet as of September 30.
In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 93,000 |
| Accounts receivable | 127,000 | |
| Inventory | 45,000 | |
| Plant and equipment, net of depreciation | 219,000 | |
| Total assets | $ | 484,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 80,000 |
| Common stock | 330,000 | |
| Retained earnings | 74,000 | |
| Total liabilities and stockholders’ equity | $ | 484,000 |
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Beech’s managers have made the following additional assumptions and estimates: -Estimated sales for July, August, September, and October will be $300,000, $320,000, $310,000, and $330,000, respectively. -All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. -Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. -Monthly selling and administrative expenses are always $56,000. Each month $6,000 of this total amount is depreciation expense and the remaining $50,000 relates to expenses that are paid in the month they are incurred. -The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. 4. Prepare a balance sheet as of September 30. |
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In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 75,000 |
| Accounts receivable | 140,000 | |
| Inventory | 66,500 | |
| Plant and equipment, net of depreciation | 227,000 | |
| Total assets | $ | 508,500 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 88,000 |
| Common stock | 311,000 | |
| Retained earnings | 109,500 | |
| Total liabilities and stockholders’ equity | $ | 508,500 |
Exercise 8-13
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $380,000, $400,000, $390,000, and $410,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 15% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $52,000. Each month $7,000 of this total amount is depreciation expense and the remaining $45,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
Required:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30.
4. Prepare a balance sheet as of September 30.
In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 90,000 |
| Accounts receivable | 136,000 | |
| Inventory | 62,000 | |
| Plant and equipment, net of depreciation | 210,000 | |
| Total assets | $ | 498,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 71,100 |
| Common stock | 327,000 | |
| Retained earnings | 99,900 | |
| Total liabilities and stockholders’ equity | $ | 498,000 |
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $60,000. Each month $5,000 of this total amount is depreciation expense and the remaining $55,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
Required:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30.
4. Prepare a balance sheet as of September 30.
In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 82,000 |
| Accounts receivable | 129,000 | |
| Inventory | 52,500 | |
| Plant and equipment, net of depreciation | 217,000 | |
| Total assets | $ | 480,500 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 78,000 |
| Common stock | 347,000 | |
| Retained earnings | 55,500 | |
| Total liabilities and stockholders’ equity | $ | 480,500 |
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $280,000, $300,000, $290,000, and $310,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 15% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $52,000. Each month $5,000 of this total amount is depreciation expense and the remaining $47,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
Required:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30.
4. Prepare a balance sheet as of September 30.
In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 80,000 |
| Accounts receivable | 135,000 | |
| Inventory | 41,250 | |
| Plant and equipment, net of depreciation | 211,000 | |
| Total assets | $ | 467,250 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 72,000 |
| Common stock | 345,000 | |
| Retained earnings | 50,250 | |
| Total liabilities and stockholders’ equity | $ | 467,250 |
Beech’s managers have made the following additional assumptions and estimates:
Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively.
All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month’s ending inventory must equal 15% of the cost of next month’s sales. The cost of goods sold is 70% of sales. The company pays for 30% of its merchandise purchases in the month of the purchase and the remaining 70% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30.
Required:
1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30.
2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.
2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30.
3. Prepare an income statement for the quarter ended September 30.
4. Prepare a balance sheet as of September 30.
In: Accounting
Milo Company manufactures beach umbrellas. The company is preparing detailed budgets for the third quarter and has assembled the following information to assist in the budget preparation:
The Marketing Department has estimated sales as follows for the remainder of the year (in units):
| July | 38,000 | October | 28,000 |
| August | 86,000 | November | 14,500 |
| September | 55,000 | December | 15,000 |
The selling price of the beach umbrellas is $13 per unit.
All sales are on account. Based on past experience, sales are collected in the following pattern:
| 30% | in the month of sale |
| 65% | in the month following sale |
| 5% | uncollectible |
Sales for June totaled $455,000.
The company maintains finished goods inventories equal to 15% of the following month’s sales. This requirement will be met at the end of June.
Each beach umbrella requires 4 feet of Gilden, a material that is sometimes hard to acquire. Therefore, the company requires that the ending inventory of Gilden be equal to 50% of the following month’s production needs. The inventory of Gilden on hand at the beginning and end of the quarter will be:
| June 30 | 90,400 | feet |
| September 30 | ? | feet |
Gilden costs $0.60 per foot. One-half of a month’s purchases of Gilden is paid for in the month of purchase; the remainder is paid for in the following month. The accounts payable on July 1 for purchases of Gilden during June will be $48,390.
Required:
1. Calculate the estimated sales, by month and in total, for the third quarter.
2. Calculate the expected cash collections, by month and in total, for the third quarter.
3. Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.
4. Calculate the quantity of Gilden (in feet) that needs to be purchased by month and in total, for the third quarter.
5. Calculate the cost of the raw material (Gilden) purchases by month and in total, for the third quarter.
6. Calculate the expected cash disbursements for raw material (Gilden) purchases, by month and in total, for the third quarter.
Complete this question by entering your answers in the tabs below.
Calculate the estimated quantity of beach umbrellas that need to be produced in July, August, September, and October.
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In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is shown below:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 84,000 |
| Accounts receivable | 144,000 | |
| Inventory | 63,750 | |
| Plant and equipment, net of depreciation | 223,000 | |
| Total assets | $ | 514,750 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 84,000 |
| Common stock | 349,000 | |
| Retained earnings | 81,750 | |
| Total liabilities and stockholders’ equity | $ | 514,750 |
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Exercise 8-12 Beech’s managers have made the following additional assumptions and estimates: Estimated sales for July, August, September, and October will be $340,000, $360,000, $350,000, and $370,000, respectively. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. Each month’s ending inventory must equal 25% of the cost of next month’s sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. Monthly selling and administrative expenses are always $44,000. Each month $6,000 of this total amount is depreciation expense and the remaining $38,000 relates to expenses that are paid in the month they are incurred. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. 4. Prepare a balance sheet as of September 30. |
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In: Accounting
Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company’s balance sheet as of June 30th is:
| Beech Corporation | ||
| Balance Sheet | ||
| June 30 | ||
| Assets | ||
| Cash | $ | 90,000 |
| Accounts receivable | 136,000 | |
| Inventory | 62,000 | |
| Plant and equipment, net of depreciation | 210,000 | |
| Total assets | $ | 498,000 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | $ | 71,100 |
| Common stock | 327,000 | |
| Retained earnings | 99,900 | |
| Total liabilities and stockholders’ equity | $ | 498,000 |
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Beech’s managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $210,000, $230,000, $220,000, and $240,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month’s ending inventory must equal 30% of the cost of next month’s sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $60,000. Each month $5,000 of this total amount is depreciation expense and the remaining $55,000 relates to expenses that are paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. 2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. 3. Prepare an income statement for the quarter ended September 30. 4. Prepare a balance sheet as of September 30. |
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In: Accounting